Term Life Insurance vs. Whole Life Insurance – What Should You Choose?

Selecting the right type of insurance is a crucial moment in your life and the life of your dependents. An improper choice might make you crack open the piggy bank and put an unwanted financial burden on your shoulders.

life insurance with brokerIn contrast, you can pay just a few bucks for a policy, but your family will end up with very little financial support when it is needed the most. This problem must be thoroughly analyzed. In most cases, you end up with 2 policies to choose from: term life insurance and whole life insurance. In this blog post we will present them both, but it is up to you to decide.

Term life insurance is a low-cost, simple and flexible policy that offers protection for a predetermined amount of time. The company agrees to issue a policy available for 1, 5, 10, 15, 20 or 30 years. The client selects the length and the maximum amount of coverage.

Premiums start as very cheap, but they get more expensive periodically, so it is not recommended to be purchased for a very long amount of time, unless you have the money.  Term life has a very flexible payment system and premiums can be paid: monthly, quarterly, bi-annually and annually.

Whole life insurance is permanent policy and it offers lifetime protections. Premiums are kept at the same level for the rest of the policy. Besides a savings component, whole life is characterized by an investment component. Excess profit made by the insurer can be tapped in or added to the savings component. Furthermore, it can be used to finance the policy.

All financial benefits obtained through whole life, including death benefit, is tax free. It is the suitable policy for long term investments and leaving as inheritance a great sum of money.

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